08 May

Daily Watch – Companies get huge debt raise, Banks in billion naira ad love affair

  • The SEC says companies may raise as much as ₦200 billion from the sale of debt instruments in 2018, a figure which will be the highest ever in the country’s history. According to the regulator, five companies have already submitted plans for debt sales totalling ₦60.5 billion. It said improved liquidity on the NSE and FMDQ OTC Securities Exchange is encouraging firms to sell more debt securities. SEC data showed that companies raised ₦23 billion in 2017 and ₦103 billion in 2016. The 2017 figures, a four-year low, were in part due to the large FG – which included Eurobond, Sukuk, green and savings bonds – and state debt instrument issuances, which were earmarked for infrastructural projects and funding budget deficit.
  • Nigerian banks spend more on advertising than companies in other sectors. According to a Nairametrics analysis, the Tier 1 DMBs – First Bank, UBA, GTB, Access and Zenith spent a combined ₦35.7 billion on advertising in FY 2017, slightly above the ₦31.1 billion the banks spent for the same purpose in 2016. Zenith was the highest spender, recording ₦8.8 billion in ad costs in 2017, a little less than ₦9.5 billion it spent in 2016. It seemed to help as the company recorded an annual profit of ₦177 billion on gross earnings of ₦740 billion in 2017. GTB (₦7 billion in ad spend) and Access (₦6 billion) ended the year positively while First Bank (₦6.4 billion) and UBA (₦7.4 billion) had a down year. The report noted some big spenders in other sectors such as Unilever (₦3.7 billion), Okomu Oil (₦540 million) and WAPCO (₦477 million).
  • The NBS says the country’s ATMs recorded transactions valued at ₦1.568 billion in Q1 2018. In its ‘Selected Banking Sector Data for the First Quarter 2018’ posted on its website, the statistics agency said a total of 457,226,406 transactions valued at ₦32.48 trillion were recorded on electronic payment channels, with ATM transactions dominating the volume of businesses recorded by banks at 212,370,853 transactions. In terms of credit to private sector, the report stated that a total of ₦15.6 trillion in credit was allocated by the banks in the quarter, with oil and gas and manufacturing sectors receiving ₦3.42 trillion and ₦2.07 trillion respectively to record the highest credit allocations within the period. The report added that the number of banks staff decreased by -0.93 percent from 90,453 in the Q4 2017 to 89,608.
  • The Nigerian Aviation Handling Company’s board of directors has recommended a dividend of ₦406 million for FY 2017. The dividend, which translates to 25 kobo per share, is expected to be approved by shareholders at its forthcoming AGM. NAHCo, which provides aircraft, passenger and cargo handling services surmounted recorded a turnover of ₦7.926 billion in 2017, compared with ₦7.956 billion in 2016. Finance cost was reduced from ₦545 million in 2016 to ₦213 million in 2017, while PAT rose from ₦581 million in 2016 to ₦776 million in 2017, an increase of 34 percent. Earnings per share improved from 36 kobo to 48 kobo. The proposed dividend will be higher than the 22 kobo paid for 2016.
  • Nestlé has confirmed that it has taken a ₦3.4 billion impairment loss on its new Water Factory in Abaji in the Federal Capital Territory. The Abaji factory was commissioned in 2016 and compliments the existing Agbara factory in Ogun State. In its Q1 2018 interim results, the company said “the expected business growth and gain of market share” for the factory has not been realised and “outlook for future expansion is below estimates.” Based on this, it has announced a test on the viability of the factory. The factory, commissioned in 2016, cost the FMCG giant about ₦5.6 billion to construct on 14.6 hectares of land and was to create 111 new jobs and produce Nestlé Pure Life, widely regarded as the world’s largest bottled water brand. Nestlé reported a ₦8.6 billion profit this quarter compared to ₦8.3 billion in the prior quarter. Without this impairment, the company’s profits may have been in excess of ₦13 billion.